What drives energy consumption in developing countries? The experience of selected African countries

This study investigates the drivers of energy consumption in Sub-Saharan African countries. It applies the bounds testing approach to cointegration to time series data at individual country levels over the period from 1970 to 2011. The study finds that energy consumption is cointegrated with real GDP per capita, industrial output, imports, foreign direct investment, credit to private sector, urbanization and population. Furthermore, the sign and magnitude of long-run estimates vary significantly for a single country and across countries depending on the energy consumption variable used. Overall, the findings confirm the leading role of economic growth, industrial output, population and urbanization. Economic growth, industrial output and population have positive effects on energy consumption in the majority of countries. Given the urgent need to address climate change, African countries should adopt policies to improve energy efficiency and accelerate transition toward renewable energy. The African Renewable Energy Initiative launched at the 21st session of the United Nations Conference of the Parties (COP21) is an opportunity for African countries to provide and maintain widespread access to reliable and affordable environmentally cleaner energy to meet the requirements of rapid economic growth and improved living standards.     

Do urbanization and industrialization affect energy intensity in developing countries?

Against a backdrop of concerns about climate change, peak oil, and energy security issues, reducing energy intensity is often advocated as a way to at least partially mitigate these impacts. This study uses recently developed heterogeneous panel regression techniques like mean group estimators and common correlated effects estimators to model the impact that income, urbanization and industrialization has on energy intensity for a panel of 76 developing countries. In the long-run, a 1% increase in income reduces energy intensity by − 0.45% to − 0.35%. Long-run industrialization elasticities are in the range 0.07 to 0.12. The impact of urbanization on energy intensity is mixed. In specifications where the estimated coefficient on urbanization is statistically significant, it is slightly larger than unity. The implications of these results for energy policy are discussed.     

What causes the change in energy demand in the economy?: The role of technological change

This paper proposes a simple and theoretically clear approach to the estimation of technological change in a multisector general equilibrium framework. This study employs the Multiple Calibration Decomposition Analysis (MCDA) to evaluate technological change that is responsible for changes in energy use and carbon dioxide emissions in the Japanese economy in the oil crises period from 1970 to 1985. The MCDA serves as an elementary way of separating structural change due to technological change from that due to price substitution effects, capturing the interdependence among economic sectors. The empirical result provides a better understanding of the effects on the economy of technological change in that significant period.     

Fusion energy : An energy source of the future?

With an increasing world population and a growing economy, the demand for energy is sure to grow. The latest predictions for world energy demand all show an upward trend and even with increased energy efficiency we will still need substantially more energy by 2050 than we use today. Where's it to come from? Dr Federico Casci of the European Fusion Development Agreement (EFDA) organisation believes part of the answer is fusion…     

Does energy efficiency improve technological change and economic growth in developing countries?

Does a trade-off exist between energy efficiency and economic growth? This question underlies some of the tensions between economic and environmental policies, especially in developing countries that often need to expand their industrial base to grow. This paper contributes to the debate by analyzing the relationship between energy efficiency and economic performance at the micro- (total factor productivity) and macro-level (countries' economic growth). It uses data on a large sample of manufacturing firms across 29 developing countries to find that lower levels of energy intensity are associated with higher total factor productivity for the majority of these countries. The results are robust to a variety of checks. Suggestive cross-country evidence points towards the same relation measured at the macro-level as well.     

Autonomous efficiency improvement or income elasticity of energy demand: Does it matter?

Observations of historical energy consumption, energy prices, and income growth in industrial economies exhibit a trend in improving energy efficiency even when prices are constant or falling. Two alternative explanations of this phenomenon are: a productivity change that uses less energy and a structural change in the economy in response to rising income. It is not possible to distinguish among these from aggregate data, and economic energy models for forecasting emissions simulate one, as an exogenous time trend, or the other, as energy demand elasticity with respect to income, or both processes for projecting energy demand into the future. In this paper, we ask whether and how it matters which process one uses for projecting energy demand and carbon emissions. We compare two versions of the MIT Emissions Prediction and Policy Analysis (EPPA) model, one using a conventional efficiency time trend approach and the other using an income elasticity approach. We demonstrate that while these two versions yield equivalent projections in the near-term, that they diverge in two important ways: long-run projections and under uncertainty in future productivity growth. We suggest that an income dependent approach may be preferable to the exogenous approach.     

Decarbonization of the U.S. electricity sector: Are state energy policy portfolios the solution?

State governments have taken the lead on U.S. energy and climate policy. It is not yet clear, however, whether state energy policy portfolios can generate results in a similar magnitude or manner to their presumed carbon mitigation potential. This article seeks to address this lack of policy evidence and contribute empirical insights on the carbon mitigation effects of state energy portfolios within the U.S. electricity sector. Using a dynamic, long-term electricity dispatch model with U.S. power plant, utility, and transmission and distribution data between 2010 and 2030, this analysis builds a series of state-level policy portfolio scenarios and performs a comparative scenario analysis. Results reveal that state policy portfolios have modest to minimal carbon mitigation effects in the long run if surrounding states do not adopt similar portfolios as well. The difference in decarbonization potential between isolated state policies and larger, more coordinated policy efforts is due in large part to carbon leakage, which is the export of carbon intensive fossil fuel-based electricity across state lines. Results also confirm that a carbon price of $50/metric ton CO₂e can generate substantial carbon savings. Although both policy options – an energy policy portfolio or a carbon price – are effective at reducing carbon emissions in the present analysis, neither is as effective alone as when the two strategies are combined.     

Are fluctuations in energy consumption per capita transitory? Evidence from a panel of Pacific Island countries

This study applies the panel stationarity test developed by [Carrion-i-Silvestre et al 2005. Breaking the panels: An application to GDP per capita. Econometrics Journal 8, 159–175] to examine the stationarity of energy consumption per capita for a panel of 13 Pacific Island countries over the period 1980–2005. This test has the advantage that it allows for multiple structural breaks at unknown dates that can differ across countries and can account for all forms of cross-sectional correlation between countries. The conclusion from the study is that energy consumption per capita in approximately 60% of countries is stationary and that energy consumption per capita for the panel as a whole is stationary. The study offers several suggestions for modelling energy consumption and policy-making in the Pacific Islands.     

Sources of change in the demand for energy by Indonesian households: 1980–2002

This paper describes the energy transition in Indonesia and examines the determinants of energy demand, by fuel. The key innovation of this paper is the documentation of how these relationships have evolved over time. We present a new method to combine econometric analysis and index decomposition analysis to examine household energy transition. This approach also allows us to consider a broad range of demographic and structural factors, while providing a clear and concise representation of our findings. We find that the composite indices mask important underlying patterns. In particular, our results indicate that energy transition in Indonesia cannot be confidently attributed to any one index. Rather, it has been driven predominantly by the triple interaction of demographics, income growth, and change in demand/supply parameters. Our findings point to the importance of utilizing time-series data in studying both the characteristics and determinants of energy transition in developing countries.     

Seasonal relationship of peak demand and energy impacts of energy efficiency measures—a review of evidence in the electric energy efficiency programmes

While energy efficiency programmes traditionally focus on energy savings, there is also a policy interest in their impact on system peak demand. Examples include demand-side management, integrated resource planning and recent developments to integrate energy efficiency into forward capacity markets. However, there is only limited research on the relationship between peak demand impacts and overall energy savings from efficiency measures, although this relationship can have important bearings on efficiency programmes. This paper reviews utility efficiency programmes in nine jurisdictions in North America and analyses how the seasonal peak-energy relationship differs between commercial and industrial (C&I) and residential sectors, among efficiency measures. In terms of the seasonal difference in peak demand impacts, these programmes show that residential lighting and residential water heating can deliver greater peak savings in weekday early evening winter peak periods. By contrast, C&I lighting and residential appliances make higher peak savings in weekday afternoon summer peak periods. A seasonal difference is more significant in lighting, especially residential lighting, than other measures. The evidence from North America also suggests that space cooling in both sectors and C&I lighting may well make greater peak savings relative to non-peak impacts than other measures during summer peak periods, while in winter peak periods, residential lighting can achieve greater peak savings relative to non-peak impacts. This review highlights the significance of regional electricity use patterns along with climatic and regulatory conditions and indicates how further research may contribute to appropriate electricity demand reduction programme design and monitoring regimes in particular regions.     

What might be the energy demand and energy mix to reconcile the world’s pursuit of welfare and happiness with the necessity to preserve the integrity of the biosphere?

In today’s global energy mix with a share of 80% fossil energy, the growth of the world population and energy demand will lead to a conflict between stable ecosystems and global welfare. The inspection of social indexes of welfare and happiness leads to the following energy plan: high-income countries with a current annual energy demand of up to 8 tonnes of oil equivalent per capita (toe pc) have to reduce their demand to 2 toe pc, which should be sufficient without cutback in welfare. Vice versa, low-income countries increase their demand until 2 toe pc are reached. Compared to today this scenario (2 toe pc, 9 billion people by 2050) leads to an increase of the ecological footprint from today 1.3 to 2 planet Earths in today’s technologies. The only solution to provide 2 toe pc without damaging the biosphere is a reduction of the CO₂ footprint with a current share of 50%. A complete shift from fossil fuels to renewables would half the ecological footprint as needed for the desired footprint of one planet Earth. To reach this goal, one or more forms of solar power and/or nuclear power are needed, as the potential of non-solar renewables is too small.     

Are energy efficiency standards within the electricity sector a form of regulatory capture?

There is a growing trend to introduce energy efficiency standards at the state level. We examine why electricity utilities may be in favor of such a standard and conclude that energy efficiency standards may be a form of regulatory capture.     

Analysis of renewable energy progress in the western Balkan countries: Bosnia–Herzegovina and Serbia

Within the framework of achieving the European environmental targets towards climate change mitigation, as well as decreasing the fossil fuel dependence and its negative effects on global warming, renewable energy sources (RES) promotion has become a major issue of concern in most European Union (EU) countries. In the above context, most EU countries have endorsed initiatives to foster RES implementation development and inclusion in the energy mix, aiming to endeavor and further impel the benefits deriving from RES and harmonize to the EU Directive or Kyoto Protocol. Nevertheless, only few sporadic efforts have been examining countries and compare the requirements for promoting RES implementation that lack specific RES obligations or a framework set by the Kyoto Protocol or the EU Directive, and particular Balkans countries with great RES potential, such as BiH and Serbia. The main objective of this paper is to analyze the conditions and modalities for RES progress within the economic, political and institutional dimension, in these two neighboring countries located in the vicinity of EU Member States (MS), which appear to have a similar historical, political and economical background and an extensive RES potential. The analysis indicated that RES development in BiH seems to be a slow process, its institutional framework is partly established and further strengthening is required. In Serbia, the institutional framework is efficiently established, are in the process of developing new legislation to facilitate renewable energy development.     

Enlarging the EU's internal energy market: Why would third countries accept EU rule export?

Why would countries without a membership perspective seek integration into the EU's internal energy market? One major element of the EU's external energy policy is the export of EU energy norms and regulations to neighbourhood countries and beyond. A core legal instrument the EU uses in this context is the Energy Community Treaty (ECT). The ECT goes both geographically and regarding its depth significantly beyond neighbourhood or association policies, addressing potentially also countries in the ‘far neighbourhood’ and aiming at the creation of a Single Market for energy with these countries. While, however, EU candidate countries are obliged to adopt the “acquis” before accessing the EU and therefore comply to EU rules already before they enter the Club, I argue that countries with no or only a vague membership perspective – i.e. countries where the EU cannot apply the “conditionality” – approach (e.g., ENP countries)—aim at deeper integration with the EU because they are either eager to demonstrate their capability and potential to become part of the Club, they seek greater independence from a regional hegemon or they envisage significant economic gains as common norms, rules and standards are likely to increase economic exchange with the EU.     

Saving money vs investing money: Do energy ratings influence consumer demand for energy efficient goods?

The article analyses economic barriers leading to the energy efficiency gap in the market for energy-using products by observing several million transactions in the UK over two years. The empirical exercise estimates AIDS models for refrigerators, washing machines, TVs, and light bulbs. Results indicate that market barriers are crucial in the demand for energy efficient options, and consumer response to changes in appliance prices, total expenditures, and energy prices depends on the possibility of behavioural adjustments in consumption. In contrast with the induced innovation hypothesis, current electricity prices can fail to induce innovation because of their short-term impact on disposable income, while consumers invest in energy efficiency when expecting electricity prices to rise in the future.     

Investment in energy efficiency: do the characteristics of investments matter?

??Investment in energy efficiency: do the characteristics of firms matter??? In their famous 1998 paper, DeCanio and Watkins raised the question and answered it affirmatively. Our paper addresses a parallel question: ??Investment in energy efficiency: do the characteristics of investments matter??? To answer this question, we first describe our new investment decision-making model, applicable to all investment types. We then discuss our research results, based on questionnaires submitted to finance managers of 35 major electricity consumers in various commercial and industrial sectors. We show how characteristics other than profitability play an important role in investment choices. The investment category influences profitability evaluation, profitability requirement, and, ultimately, the decision made. For half of the firms in our study, energy-efficiency investments did not exist as a category. However, wide diversity regarding investment behavior is observed between firms. Our findings lead to a different explanation of the energy-efficiency gap and open the way for a new approach to promoting energy-efficiency investments, which is briefly discussed in the conclusion.     

Modelling of hybrid energy system—Part III: Case study with simulation results

This paper presents the results of the application of model (developed in part I) and simulation algorithm (developed in part II) for determining the techno-economics of battery storage type hybrid energy system intended to supply the load of a rural remote area having a cluster of nine villages (grid isolated). The hour-by-hour simulation model is intended to simulate a typical one month period of system operation. For simulation purpose, hourly solar insolation data and load data have been generated and used as an input data. Demand side management (DSM) is used in this study to smooth out the daily peaks and fill valleys in the load curve to make the most efficient use of energy sources. The economic analysis has resulted in the calculation of optimized hourly, daily, and monthly system unit cost of proposed hybrid energy system. The obtained results represent also a helpful reference for energy planners in Uttarakhand state and justify the consideration of hybrid energy systems more seriously.     

Modelling of hybrid energy system—Part I: Problem formulation and model development

A well designed hybrid energy system can be cost effective, has a high reliability and can improve the quality of life in remote rural areas. The economic constraints can be met, if these systems are fundamentally well designed, use appropriate technology and make use effective dispatch control techniques. The first paper of this tri-series paper, presents the analysis and design of a mixed integer linear mathematical programming model (time series) to determine the optimal operation and cost optimization for a hybrid energy generation system consisting of a photovoltaic array, biomass (fuelwood), biogas, small/micro-hydro, a battery bank and a fossil fuel generator. The optimization is aimed at minimizing the cost function based on demand and potential constraints. Further, mathematical models of all other components of hybrid energy system are also developed. This is the generation mix of the remote rural of India; it may be applied to other rural areas also.     

Oil-exporting countries of the Persian Gulf: What happened to all that money?

Our objective is to assess the economic performance of Middle Eastern oil-exporting countries over the past 25 years based on their general economic characteristics (economic dependence on a depletable resource) and attendant policy requirements (transforming to a non-depletable resource-based economy). As oil-exporting countries, we assess the macroeconomic and development policies that they should have implemented and have actually implemented over time. We find that their policies have rarely been consistent with the requirements of exhaustible resource-based economies. This has resulted in a widespread misallocation of resources and a divergence from their essential goal of economic transformation.